Track2Realty Exclusive: On a closer look there are big and serious questions on the authenticity and prima facie it appears as if the categories have been customised to fit in the highest bidder.

I can understand that any nomination being snubbed by the jury cries foul and this happens across the world, but the award winner have to have a crowd pleasing (read customer satisfaction) choice and not the whims and fancy of the organisers.

Has any of the award jury in real estate ever gone to cross check the customers’ experience of these realtors? Most of the award winning realtors have piles of cases pending, ranging from law enforcement agencies to consumer courts.

If the fixation of awards is just a B2B exercise and not related with voting results of the user experience, what is the relevance of such fraudulently operated awards?

I am afraid many of such “surviving on award distribution” companies don’t even reveal the selection criterion, rational and methodology behind awarding the lesser mortal realtors while biggies in the fray often prefer to stand out of the mess.

As one such leading award manufacturer once admitted, “it is a cut throat and cluttered segment now. The success of award in our case is that most of the award winning realtors themselves comes to take the award, unlike others where junior executives are sent for the photo session and trophy.”

Short on consumer confidence and high on award list seems to be the mantra of survival for some of the realtors for whom purchasing such, often expensive awards also translates into foreign funds who are not high on due diligence in this part of the world. Isn’t it a racket of fraudulently duping both the gullible home buyers and greedy investors?

No wonder, it is the fly-by-night realtors and mid-size greedy developers who are there to pay for the awards and make it a self-publicised glory. Biggies in the realty business have often been staying away from such awards since they know their acceptance to the trophy will only lend credence to the award racket while they as developers will be bracketed along with trophy greedy realtors in the market.

If CIA could rig a Nobel Prize in 1958, Indian realtors’ sense of sponsored glory is not going to hurt the global economy or polity, at least. It may hurt the greedy investors have already burnt their fingers in the Indian realty market, but where such awards are going to hurt the most is the gullible home buyers who often take the credibility of the developers on sheer face value that has stamp of award writ large.

Track2Realty Exclusive: Sitting in the back bench of a real estate award night I heard two developers talking among them as to in which category are they getting the award. Did I hear it right? Not the nominated category, but the category of getting award? Even before the awards were announced, how come they know that they have already bagged the award?

What I heard the next was even more earth shattering news for me—how much did it cost you? I thought I had a “Stop Press” kind of “Breaking News” but I am told not to file the story by the then editor.

Is it because it is libellous and hard to prove is what kept me wondering for some time. Later I am told this is no news. The award racket in the world of real estate is something that everybody knows but nobody admits.

Well, I may be new to the world of real estate, but if this is the reality I prefer to be not just new but novice as well.

When I see the developers with a tagline of “India’s Most Awarded Real Estate Company”, I hang my head with shame rather than feeling optimistic about the realty company or its projects.

Why are the realtors desperate to beg, borrow or steal the award? Does it add value to their brand, sales graph or any other metrics in the collective consciousness of the society at large?

The business awards across the board have often drawn criticism for their selection process and partiality, but in the context of Indian real estate I feel it is an open and shut case of a price tag attached with the award.

Some of the more respected business awards are the ones who follow certain ethics in terms of transparency and established benchmark in terms of eligibility criterion.

None of this has even been seen in the real estate awards in this part of the world where awarding institutions, I am afraid whether they can be termed as institutions, are mostly B2B realty publications and other industry stake holders.

For instance, none of the international awarding institutions worth a mention have ever signed the awardee company as the main sponsor of the award night. If a nominated company or individual has been charge sheeted by the law of the land the very ethics of the award suggests the jury must disqualify his nomination.

However, it is strange to find a realty company being charge sheeted and Managing Director behind bars, still the Chairman receiving “Lifetime Achievement Award.”

Any neutral observer who has not been exposed to the murky world of real estate can make out that the awards, if not completely rigged, has got categories just so narrow that pretty much everyone comes out with an award.

How else could one justify a small developer with a standalone mall in Ranchi of the size of a local shopping centre coming out with a trophy that suggests he has innovation as his claim to fame in realty business?

…..to be continued

By: Rohit Gera, MD, Gera Developers

Track2Realty Exclusive: The gradual steady price rise philosophy in Pune property market also helps keep speculators away from the projects. We do not get too many instances of investors booking entire buildings or investing in projects with a view to exit in a few months with profit booking.

The other aspect about the Pune market is the fact that there are an extremely large number of developers in the city. CREDAI Pune Metro has over 325 members registered. This leads to a situation of hyper competition. No single developer has a market share in excess of 2 per cent.

As a result of this intense competition, developers are not able to follow any run away pricing policies and as such, the prices continue to rise in moderation. In fact, if one is to consider risk adjusted returns when factoring land at current market prices, the margins earned by developers is not attractive. The profitability is buoyed by the land appreciation which does not have true value addition done by developers.

When one turns attention to the supply side, we find that the total stock of projects that were under construction and projects that were ready but had stock to sell rose from 1.78 lakh apartments in December 2011 to 2.03 lakh apartments in June 2012 and increase of 14 per cent in 6 months.

While this figure certainly is a big jump, the corresponding supply of stock remained steady at approx. 20 per cent. This indicates that developers continue to launch stock that sees regular absorption.

The 2008 meltdown has certainly got developers to focus far more closely on the phasing of the projects. New phases in projects get launched only when older phases get reasonably sold. Each phase now is smaller than phases in the past. This too keeps the overall over supply situation reasonably under control.

Moreover, Pune continues to remain a destination for end users to own homes to occupy. This leads to the arrival of retail, leisure and other infrastructure sooner than if projects in any area were to be full of investors.

All in all, I believe that these characteristics of the Pune realty market will continue to contribute to Pune being a sought after destination for home owners to purchase homes.

By: Sumit Bharana, Director, Era Landmarks

The Indian realty sector is facing an acute scarcity of labour as on today. The fast emerging problem will soon drive the realty sector to take to large scale mechanization and what is often referred to as project management. The propensity can be clearly understood based on the premise that the shortage of labour is projected to rise to about 65% mark by the next decade.

Additionally more work-force nowadays is willingly shifting from the traditional brick and mortar industry to fetch more lucrative opportunities offered by IT, ITes, banking, and Telecom industry.

In order to meet the challenges of cost, quality and time, the future of the sector will predominantly be contingent on project management, mechanization and pre-cast or prefabricated technology. The sector has perpetually witnessed an age old struggle to manage cost, quality and time in various construction projects.

With the factor input cost of raw material expected to double in the near future, the sector is not left with much of a choice than to adopt and blend in the best of globally acceptable practices. For the same reason, it wouldn’t be wrong to say that in order to sustain in the due course of long run, the sector might just have to strongly consider a large scale ‘mechanization’ on one hand, while ‘outsourcing of project management services’ on the contrary.

At the same time, it has also been found out that the currently prevalent rate of mechanization at about 20% in India is relatively low as compared to that of the developed nations where it currently ranges somewhere between 60-70% mark. With India precisely placed at the brink of rapid large scale urbanization and development, an ever-increasing demand for commercial and residential space has been correspondingly been observed. Given the currently prevalent dynamics, such needs could only be met only by taking to mechanization and project management practices.

As for the compulsions and circumstances that resulted in the present stage of crossroads for the sector, the perspectives of much of the analysts, builders, developers have been multi-faceted nonetheless. The shortage anticipated in the next few years that could be attributed to the rapid pace of development, particularly in the Tier II & Tier III cities. In such a scenario, it is the project management services that will offer all consumers a one-stop solution. The same will enable well-integrated and supervised implementation of projects right from day one of design until the stage of final delivery.

It is also imperative to take into a strong account, a pertinently ideal project management practice depending on the nature of the project including aspects such as design, construction-related activities, and management of work schedules, which could often lead to time overrun for the delivery of the project. Sadly, this is likely to spur the overall cost of construction as well. All put together, the realtors sooner or later might just have to consider, mechanisation of labour as an all new alternative to overcome the potential crises and take the increase in their cost of construction as  nothing short of a pinch of salt, so to speak.

]]> http://www.track2realty.com/mechanisation-needed-for-project-management-to-reduce-labour-shortage/feed/ 0 http://www.track2realty.com/key-challenges-to-move-towards-smart-cities-in-india-iii/ http://www.track2realty.com/key-challenges-to-move-towards-smart-cities-in-india-iii/#comments Sun, 05 May 2013 12:34:20 +0000 Track2Realty http://www.track2realty.com/?p=8511 By: Brotin Banerjee, MD & CEO, Tata Housing

Track2Realty Exclusive: Urban Planning, experts suggest, is based on the three-tier concept of engineering, architecture and social concerns. Each is incomplete without the other. While a city needs its share of road networks, it also needs space for, say drainage and it needs hospitals and schools and blood banks et al. although each city has separate agencies to deal with these needs, a central agency is needed to provide a holistic approach to crisis management and to contain chaos.

Technology can be a great leveler, if used correctly. It can provide a one-stop solution to traffic management by providing regular and correct updates to citizens about public transport; it can help better manage water and waste management; channelize power and energy sans any wastage.

Citizens can avail a host of services at the touch of a button and the authorities too can reduce their work load by integrating the use of technological platforms with traditional methods, and gradually upgrade completely.

The biggest challenge lies in changing the mindset of millions, who are used to traditional modes of operation, to switch to electronic modes.

By providing for and advertising it properly, if gas connections or refill, utility bill payments are all hosted electronically, it saves the citizens and the authority time and money.

Villages or small towns in western parts of the world, compared to our metros, are better equipped to handle emergencies because of their dependence on technology.

One of the foremost objectives of the Jawaharlal Nehru National Urban Renewal Mission was to introduce e-governance in all municipalities to bring transparency and to increase accountability. In fact, financial assistance is provided for the redevelopment of old cities, water supply, waste management, drainage, transportation amongst others.

…to be continued

Track2Realty Exclusive: Developers have also been trying to get the government to introduce the concept of single window clearance. It is common knowledge that time taken to grant approvals directly affects property prices. It has been found that delays in approval processes alone increase sale value of houses by 40%.

In the current scenario, a developer is required to obtain as many as 40 to 50 clearances from various departments of the civic body. These are also known as Intimation of Disapproval (IOD) conditions, implying that the building plan will be approved, subject to all these conditions being fulfilled.

On an average, it takes around two years to obtain these clearances. A developer is required to visit at least 15 offices in order to get these 40–50 clearances. This takes a lot of time. Labour charges, charges towards electricity, water, etc. have to be borne by the developer during this time period.

There is a shortage of 31 million houses in India; of this, 26 million are in the economically weak and low income group category and this gap is widening. So, it is time to introduce reforms that will help satisfy the needs of these sections.

These reforms include administrative reforms relating to faster approvals, land reforms to protect green land and making urban infrastructure viable through higher density and removal of FSI norms as has happened in Andhra Pradesh. There is also a need for fiscal reforms relating to tax, banking and procedural issues.

According to a McKinsey report, with the population crossing 1.2 billion in 2011, the total shortage of dwelling units in urban areas will be 38 million units by 2030 in comparison to 24.71 million in 2007.

The economy will have to build between 700 million and 900 million square meters of residential and commercial space a year in order to meet urban demand. This translates into adding two Mumbai size cities or one Shanghai, each year. It is also anticipated that India will add another 215 million people to its cities by 2025.

Demand for housing in India will never be poor due to factors such as ever-increasing population, increase in disposable incomes of the younger generation of people, etc.

There may be times when there will be a lull in demand for real estate; however, demand is bound to pick up after such short bursts of sluggishness. So, although the real estate sector in India is going through a lean period at the moment, happier times for both developers and home buyers alike are not far away.

]]> http://www.track2realty.com/fast-track-clearance-to-reduce-housing-price/feed/ 0 http://www.track2realty.com/cutting-edge-of-pune-realty-market-amidst-slowdown-i/ http://www.track2realty.com/cutting-edge-of-pune-realty-market-amidst-slowdown-i/#comments Sun, 28 Apr 2013 14:55:11 +0000 Track2Realty http://www.track2realty.com/?p=8473 Track2Realty Exclusive: The Pune realty market in many ways is very different from many other cities in the country. Pune has showed tremendous resilience and a quick bounce back in the aftermath of the 2008 global crisis. In many ways, Pune depicts the behaviour of an extremely mature market leading to low levels of volatility in terms of capital values of the homes.

On the demand side, we see demand from a variety of sectors–IT, manufacturing/industrial, services all generate significant employment in and around Pune and as such, these multiple sectors all contribute to the employees who need housing.

When faced with weak global cues, the economy has looked to internal consumption.  This is reflected in the various companies in Pune–those such as the IT companies who focus on the international market were affected, however, the manufacturing companies have made up for the lack of demand caused due to the IT companies. The multiple drivers of demand therefore bode extremely well for the Pune realty market.

The demand gets translated to supply through the real estate developers. Here too, one sees some significant traits that contribute to the buoyant nature of Pune’s realty market. Developers in Pune have realized the sensitivity around affordability of the customer. Historically, Pune has been a cost conscious market across all sectors.

And from that perspective, the real estate customer is no different. As a result of this, developers have produced homes that fit close to the customer’s affordability and need in terms of size of homes too. As an example, if one is to look at 2 bedroom or 3 bedroom apartments, it is not unusual to find 2 bedroom apartments of sizes of 1300-1400 square feet and 3 bedroom apartments of 2200-2400 square feet. In Pune, this would be the exception.

The other interesting feature is the rate of increase in the prices. By and large, developers raise property prices in a steady gradual manner. This helps in maintaining the sales volumes but also importantly, when prices see a correction during down turns, the severity of the same is blunted since the prices did not rise sharply in the first place.

…..to be continued

Track2Realty Exclusive: The case of Japan is one of the most inspiring and creative as conviction of betterment leads the policy and practical solution formulations. Gate Tower Building is a 16-story office building in Fukushima-ku, Osaka, Japan. And what makes it notable is the highway that passes through the 5th-7th floors of this building. The highway is part of the Hanshin Expressway, a network (239.3 km) of expressways surrounding Osaka, Kobe and Kyoto, Japan. The Gate Tower Building is Japan’s first building to have a highway pass through it. And it had been nicknamed “beehive” referring to its appearance as a “bustling place”.

The Umeda Exit of the Ikeda Route of the Hanshin Expressway system passes through this building. The expressway is the tenant of these floors. The elevator doesn’t stop on floor 5th-7^th; floor 4 being followed by floor 8. These floors consist of elevators, stairways, machinery and other stuff.

The highway passes through the building as a bridge, held up by supports next to the building, making no contact with the building itself. The building has a double core construction, with a circular cross section and special care is taken by providing surrounded structure to the highway to protect the building from noise and vibration.

Generally expressways are built underground, and passing through a building is an extremely rare occasion. It dates back to 1983, when the redevelopment of this area was decided upon, “building permits were refused because the highway was already being planned to be built over this land. The property rights’ holders refused to give up and negotiated with the Hanshin Expressway Corporation for approximately five years to reach the current solution.”

What Mumbai needs is a strong commitment to planning. Many of the case studies show that successful projects had well thought-out plans at their bases. The case studies reveal that one very successful strategy is the creation of strong economic development agency that has independence, power and financial resources necessary to move difficult projects through the development process.

Some key initiatives by the state government would go a long way in revitalizing the urban renewal challenge, particularly in context of Mumbai. This includes granting incentive FSI to developers for construction of  LIG/MIG housing in lieu of their free-sale component;  single-window and time bound disposal of  Annexure-11  for slum redevelopment schemes;  premium for fungible FSI under SRA projects should be lower compared to non-SRA projects and higher delegation of authority for fast track clearances to key authorities.

Track2Realty Exclusive: Mumbai, while being known for its ability to provide a livelihood for one and all, is infamous for having the highest population density in the world: close to 30,000 people per square kilometer, about three times that of Delhi.

With its local rail network, thousands of buses and millions of taxis and auto rickshaws, many consider Mumbai to be better planned than its urban counterparts. While Delhi, Bangalore and Kolkata might have the metro rail, its connectivity in each of these cities is far less than Mumbai’s rail. The experience of travelling in auto rickshaws in the former two is almost always termed nightmarish.

While the Delhi Metro Rail was a rare case of projects being on time, the same cannot be said for Mumbai’s Metro rail project, which is said to supplement the railway network. This project is divided into three phases: eight lines covering about 140 km by 2021.

The first line, Versova-Andheri-Ghatkopar line, should be completed soon. After many delays, it is expected to be operational by early 2012. The other eight lines have not yet been given the green-signal. Even the new symbol of the city’s skyline, the Bandra Worli Sea Link, was about half-a-decade behind schedule.

While it is understandable that these world-class infrastructure projects involves investment from all concerned, what makes it complicated to get these projects on track is the involvement of multiple agencies, all vying to do their bit. A classic case of ‘too many cooks spoil the broth’.

In Mumbai alone, there are dozens. There’s Mumbai Metropolitan Region Development Authority (MMRDA), Brihanmumbai Municipal Corporation (BMC), the Maharashtra Housing and Area Development Authority (MHADA), the state Roadways Development Corporation (MSRDC).

…to be continued

Track2Realty Exclusive: What Indian realty needs is holistic reforms and for that what is needed is change in mindset. We wonder why every person in office doesn’t realise that his indecisiveness hurts interest of the country. Why authorities are trying to take a pro-publicity and anti-development stand whereby nobody gains?

The current slowdown in the country’s economy has adversely affected the real estate sector in India. Construction activities have virtually come to a standstill even as developers are facing difficulty in selling out the existing inventory. However, real estate still remains one of the most important sectors of the economy. The real estate sector is the second largest employer in the country, after agriculture.

The real estate sector is directly related to other sectors of the economy. The sector has many associated industries. Therefore, investment in the real estate sector has a cascading effect on its associated industries.

Government needs to take active measures to maximise the growth in the real estate sector. Developers have been trying hard to get industry status granted. Such a move on the part of the government will help developers get access to low cost institutional funds.

The laws pertaining to housing projects also need to be restructured in order to provide a boost to developmental activities, particularly in urban areas. Laws like Rent Control Act and Urban Land Ceiling and Regulation Act are highly restrictive and must be abolished.

All efforts must be made to restrict growth of slums in urban areas and develop them into hygienic colonies. There is also a need of suitable amendments in the Agriculture Land Ceiling Act and also the Land Acquisition Act of 1894.

One of the factors that inhibit the growth of real estate sector in India is the lack of basic amenities such as roads, water supply, electricity, etc. Government should make efforts to increase partnership with private sector companies in developing these basic amenities.

The participation of private players in infrastructure sector will, apart from bringing latest technology and management practices, ensure timely completion of the projects.

…..to be continued

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